First among them: Minneapolis. It nabbed the top spot on our list of Most Affordable Places To Live Well. There, homes are relatively affordable, residents enjoy a high quality of life and access to choice arts, leisure and entertainment offerings.

The Methodology

Our rankings incorporate a variety of metrics. First, we looked at housing affordability in the country’s 50 largest metros. We tracked this using the National Association of Home Builders/Wells Fargo Housing Opportunity Index, which measures how much of the local housing stock is affordable to the median income earner at present mortgage rates.

Next was a cost of living index developed by The Council on Community and Economic Research, a northern Virginia-based research firm. It looks at how much residents of each city spend on goods such as energy, clothing and a half-gallon of milk. To determine quality of life, we used a Forbes index based on 2006 Census figures that measures strength of schools, quality of health care, crime and poverty rates.

Finally, because we all need something to do, we used data from Sperling’s Best Places that identifies the country’s best arts and leisure destinations, measuring a wide range of entertainment options from music venues and museums to professional sports teams and miles of shoreline. Sperling’s ranks each city on each category relative to the others and then determines an overall ranking.

What pushed Minneapolis to the top? Last quarter, 61% of the area’s home sold were available to the median household earner, according to NAHB/Wells Fargo, which puts the City of Lakes in 17th place of the 50 cities we measured. Minneapolis ranked just under the median in cost of living. Its quality of life ranking most distinguishes it; here the city ranked third, and came in ninth in arts and leisure offerings.

Indeed, Minneapolis has top-notch cultural institutions, whether they be theaters, music halls or museums. The Guthrie Theater, for example, is considered one of the premier facilities in the country. The Twin Cities receive funding from local corporate foundations including those of
Target
,
3M
,
Best Buy
,
General Mills
, Cargill and United Health, and from charitable institutions like the Minneapolis Foundation, which manages just under $700 million in assets.

So why haven’t you heard more about Minneapolis?

“Maybe it’s our ‘Lake Wobegon’ nature, where we’re not looking to crow about ourselves,” says Robert Hybben, a donor services associate at the Minneapolis Foundation. “There’s a very active non-profit community here, a vigorous civil society and a lot of people who are very active. It’s just been our tradition here.”

Minneapolis’ Midwestern neighbors Indianapolis and Cincinnati offer many of the same amenities, and rank second and third, respectively, as places to live well for less.

Behind The Numbers

Cost of living in many cities is undoubtedly high, but when it comes down to it, what matters most is housing affordability. A half-gallon of milk costs about 80 cents more in San Francisco than it does in Tucson, but you’d have to eat a whole lot of cereal for that price differential to add up in the same way as the cost of real estate. Based on the NAHB/Wells Fargo affordability index, only 5.7% of San Francisco homes are available to the median income earner, compared to 33.9% of homes in Tucson, despite Tucson’s far lower median income.

Desirability and the supply and demand principle contribute to local housing prices, but it’s not the only driver. In fact, land use policies and regulations often have more to do with housing prices than demand.

Houston, for example, has virtually no zoning or growth regulation policies, and as a result, has some of the most affordable housing in the country. The same can be said of Dallas and Atlanta.

“The prices we see today are reflections of historical decisions on land use,” says Elliot Eisenberg, NAHB senior economist. “Affordability is often a problem when fees, carrying costs and insurance are really high. [In Southern California] a builder can pay $100,000 in fees, which isn’t right or wrong, but we can all agree that it gets passed on to the home buyer.”

But the cultural aspects of a city cannot be ignored, especially as Americans are beginning to focus more on “the where” of their lives, and then figure things out from there.

“Jobs are certainly an attractor, but we’re seeing a new kind of trend–especially with young, highly skilled individuals–first moving to places they like, and then finding a job they like from there,” says Robert Puentes, a fellow at the Brookings Institution. “In some places … the job market is not particularly strong, but it’s attracting a lot of domestic migrants even with relatively high housing prices.”

High housing prices in some places may be set off by job growth, which also reflects positively on quality of life. Part of the reason for the rise of once-secondary cities such as Austin, Texas, and Charlotte, N.C., is due to technology bridging the distance divide. Both have recently emerged as cheaper satellites of Silicon Valley and Wall Street, respectively.